How the Invention of Spreadsheet Software Unleashed Wall Street on the World

I discovered spreadsheets almost as soon as they were invented. In the early 1980s, I was working at a camera store and had to manually update a spreadsheet of daily sales using an adding machine. When I got a PC, I was able to convert that to Visicalc and could update it in seconds instead of half an hour.

Later, working at a small software company, I learned about the joys of pivot tables in SuperCalc. Pivot tables are cool tools, by the way, and I used them at the TSX to do an analysis of field names across a series of protocol specifications. (The documents contained lists of fields per messsage; I needed a list of messages by field, and pivot tables made it possible to reorganize the data in that format).

Obviously, my applications were trivial compared to the needs of big companies and Wall Street analysts. However, the more complex the application, the more likelihood of errors, either due to faults in the spreadsheet software, mistaken assumptions, or bad or missing data. And those could have real-world consequences, as this long article in Gizmodo points out.

By shifting much of the actual number work onto techno-tools, Wolfe said, financial firms have widened the gap between decision-makers and the real-world impacts their work achieves.

Regarding his colleagues who worked on The Big Short, Wolfe commented, “They really make clear that people at the top of financial institutions did not fully understand how instruments designed and used by people under them worked. They made billion-dollar bets without understanding what they were doing. They knew the upsides, but not the downsides.”

Incidentally, the so-called “junk bond king” may have argued something similar, Deringer said; in a nutshell, Milken hinted at technological determinism, a concept that lives on at big firms today.

“Apparently at one point he said that, actually, if you wanted to identify who were the real culprits for the new, freewheeling, sort of morally boundary-crossing forms of finance that developed in the ‘80s, the people to really look at were the inventors of VisiCalc,” Deringer said.